Financial Accounting Policies
- Regulation of oil and gas company accounts
- Accounting for pre-development costsReserve definitions and disclosure requirements
- The unit of production method for calculating depreciation, depletion, and amortization (DD&A)
- Accounting for decommissioning costs and dealing with changes in estimated costs
Participants will learn about the regulatory environment in which international oil and gas companies operate. One of the key learning objectives will be an understanding of the oil and gas reserves and their importance for upstream companies. Participants will learn how reserves are used in DD&A calculation, utilizing the unit of production method, and how changes in reserve estimates are dealt with. Decommissioning activities will be fully reviewed and participants will learn how these are reported in the company’s books.
Financial Accounting for Upstream Activities
- The impairment test under IFRS and US rules and the way it is calculated
- Update on the latest status of the IASB accounting standard for extractive industries
- What is a farm out and farm in and how they are the reported in accounts
- Understanding a carried interest and the associated accounting implications
- Accounting for sales revenue and dealing with an underlift or overlift
Participants will learn what an impairment test is, why they are carried out, and how they are calculated. One of the key learning objectives of this day will be to provide participants with a full understanding of how companies manage risk by negotiating farm out and farm in agreements and carried interests. A further learning objective will be to give participants a full awareness of accounting for sales revenue in oil and gas fields.
Systems Used by Governments for Exploitation of Oil and Gas Resources
- Concessionary, royalty, and tax arrangements and accounting for tax
- Types of Production Sharing Contracts (PSCs)
- Cost oil and profit oil considerations in a PSCs
- ‘R’ factors and how they are applied
- Accounting for a PSCs
Participants will obtain a comprehensive understanding of the different approaches adopted by governments around the world on this day. The course will review royalty and tax arrangements and how they work. This will then be compared and contrasted with the alternative methods, such as Production Sharing Contracts (PSCs).
Joint Venture (JV) Accounting
- Types of joint venture and how to get into them
- Accounting for a joint venture in accordance with IFRS 11
- Joint venture funding, cash management, and billing requirements
- Unitization, redetermination, and the accounting implications that arise
- Joint venture cost allocation issues
The learning objective for participants on this day will be to become fully aware of the implications of working in a joint venture. The day will review the different types of JVs that can be used in the upstream industry and how these should be accounted for to ensure compliance with IFRS 11 on joint arrangements.
Budgeting and Strategic Planning
- Performance measurement techniques
- The nature and behavior of costs and cost control methodologies
- Preparation and use of departmental budgets
- Key objectives and principles used in financial and strategic planning
- Corporate budgeting and its significance for the organization
The final section of this day will improve participant’s ability to prepare departmental budgets and understand how these budgets are incorporated into the corporate budget. Participants will learn about the different methodologies that can be used in preparing a budget and the benefits and drawbacks of each method. Different performance indicators and how they are used to improve management and control of costs against individual budgets will be examined. Participants will also learn about the importance of strategic planning for the long term growth and development of the company and the factors that are typically considered in the upstream industry.
This course is suitable for finance and accounting personnel with a foundational knowledge of upstream oil and gas accounting and wish to expand their knowledge to cover all aspects of upstream activities. The course will also benefit financial professionals who require a better understanding and awareness of the key issues to be considered in upstream oil and gas accounting and finance.
Participants should either have attended the Exploration and Production Accounting - Level 1 course or have a reasonable understanding of oil and gas accounting principles.